CHUNG CHIU HING v. THE PERSONAL REPRESENTATIVE OF LAW SAM, DECEASED AND ANOTHER

HCMP 2384/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2384 OF 2011

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J U D G M E N T

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Introduction

1. The plaintiff (“P”) in these proceedings claims adverse possession of a property (“Property”) and claims the auction sale proceeds attributable to the Property by virtue of section 17 of the Limitation Ordinance, Cap 347 (“LO”) and under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“LCSRO”).

2. Madam Law Sam (“Madam Law”) was at all material times the registered owner of the Property on public record.  Madam Law was initially named as the sole defendant, and subsequently after the issue of these proceedings, and as a result of a search in the Births and Deaths Registry, it was revealed that Madam Law had died on 29 October 1981, aged 68.

3. The originating summons was then amended by substituting the personal representative of Madam Law as the defendant.  On 26 November 2012, the court appointed the Official Solicitor to represent the defendant for the limited purpose of accepting service on behalf of the defendant of the amended originating summons.  Upon service being duly effected on the Official Solicitor on 20 March 2013, the Official Solicitor then became functus officio.

4. On 10 January 2014, the court ordered that the present proceedings to proceed in the absence of a person representing the personal representative of Madam Law[1].

5. Thereafter, under circumstances which will be set out later in this judgment, the Secretary of Justice (“SoJ”) came to have notice of these proceedings and on 6 May 2015, SoJ applied to intervene on the ground that the Government has substantial interest in the outcome of these proceedings.  On 12 May 2015, leave was granted to SoJ to intervene and SoJ became the 2^nd defendant herein.

6. SoJ counterclaims that the Government is entitled to the Property as bona vacantia pursuant to section 4 (9) of the Intestates’ Estate Ordinance, Cap 73 (“IEO”), and thus the share of the net auction proceeds attributable to the Property.

Brief Background Facts

7. The parties had jointly filed a Statement of Agreed Facts (“Agreed Facts”).  Most of the facts were agreed.

8. The Property was a flat which was situate on the 10^th floor of a building at No 450D, Queen’s Road West, Hong Kong. The building was situate on a piece of land known as “The Remaining Portion of Section A of Inland Lot No 834” (“Lot”).  The Property was apportioned one equal undivided 364^th part or share of the Lot (“Undivided Share”).

9. Madam Law became the registered owner of the Undivided Share under an assignment dated 10 April 1969, after purchasing the same from the previous owner at a consideration of HK$15,000 (“Assignment”)[2].

10. On 3 August 2011, there was an application made by the majority owners to the Lands Tribunal under LCSRO for a compulsory sale of all the undivided shares of the Lot for development purposes (Case No LDCS 27000/2011) (“LT Proceedings”).  A sealed copy of the Notice of Application was registered in the Land Registry against the Undivided Share on 4 August 2011 and the Notice was affixed at the main entrance of the building and also advertised in the newspapers on 4 August 2011.

11. After becoming aware of the Notice of Application, P issued the originating summons herein on 21 November 2011

12. The applicants in the LT Proceedings had been directed by the judge therein to inform SoJ of the death of the registered owner of the Property Madam Law, and SoJ was duly informed on 6 March 2012[3]. On 26 June 2012, P and SoJ were joined respectively as the 13^th and the 14^th defendants in the LT Proceedings. However, SoJ did not file any notice of opposition in the LT Proceedings and took a neutral stance therein throughout[4].  SoJ was also given notice of the present proceedings on 1 June 2012, and on 9 July 2012, indicated he was seriously considering to intervene and sought information on the latest development of the present proceedings[5], but no further step was taken at the time.  

13. By a judgment of the Lands Tribunal dated 8 October 2014[6], all the undivided shares of the Lot were ordered to be sold by way of public auction (“Sale Order”).  Subsequently, in about late 2014, all the undivided shares of the Lot were sold pursuant to the Sale Order (“Compulsory Sale”).

14. Madam Law remained the registered owner of the Undivided Share on public record up until the Compulsory Sale.

15. The proceeds of sale attributable to the Property/Undivided Share were in the sum of HK$7,931,787 as at 14 April 2015 (“Sale Proceeds”). The Sale Proceeds, the subject matter at stake in this action, have since been held by the trustees appointed under the Sale Order pending final determination of this action (“Trustees”). 

16. It was P’s case that she had never met Madam Law before, and she and various members of her family had been occupying and residing in the Property for a long period of time since prior to 1985 and were still residing there when the present action was issued.

17. In the present action, P sought a declaration that Madam Law’s title to the Property was extinguished under section 17 of the LO, and that P was/is the owner of the Property and/or of the Sale Proceeds.

Disputed Issues

18. The parties had filed an agreed list of issues to be tried, consisting of 15 issues (“Agreed Disputed Issues”).

19. The issues were grouped under 4 main headings as follows :

(i) P’s claim for adverse possession (“1^st Main Issue”)

(ii) SoJ’s claim for bona vacantia (“2^nd Main Issue”)

(iii) The limitation period (“3^rd Main Issue”)

(iv) Minority owner/Sale Proceeds (“4^th Main Issue”)

1^st Main Issue – P’s claim for adverse possession

Factual Possession

20. P had filed 3 affirmations herein and she was the only witness who gave oral evidence at the trial and who was cross examined.  Her solicitors had filed various affirmations on her behalf in relation to searches of the Births and Deaths Registry and the Probate Registry, various enquiries and also in relation to service, matters of which were not challenged.

21. It was not disputed that P married a Mr Chan Wai Tong (“Mr Chan”) on 9 August 1988 in Mainland China and she gave birth to two sons respectively in 1989 and in 1993.  Mr Chan was born in Hong Kong and his mother was Law Sau Chun (“Mother-in-law”).

22. P’s evidence was that the Property was sometime prior to 1985 rented to the Mother-in-law by Madam Law pursuant to an oral tenancy agreement.  Madam Law then disappeared sometime prior to 1985 and Mother-in-law never saw her again.  Since then, Madam Law had not collected any rent from Mother-in-law who continued to occupy the Property without paying any rent.

23. It was further P’s evidence that in about 1985, Mr Chan told her that after Madam Law’s disappearance, he had moved into the Property and started to live there with Mother-in-law in order to care for her.  According to P, prior to moving into the Property, Mr Chan was living in quarters in Yau Ma Tei provided by his then employer, and he was also commuting between Hong Kong and the Mainland.

24. Prior to Mr Chan moving in, P had said that Mother-in-law was residing all by herself.  She confirmed during the trial that Mother-in-law did not sub-let any part of the Property, and that Mother-in-law gave Mr Chan the keys to the main door in 1985 when he moved in.

25. It was part of the Agreed Facts that the Property was accessible by an iron gate and a wooden door, and during their respective periods of residence at the Property, the Mother-in-law, Mr Chan, and P had the keys to the iron gate and the wooden door.

26. It was P’s evidence that no rent was paid by Mr Chan and/or Mother-in-law to Madam Law or any other person since sometime prior to 1985 after the disappearance of Madam Law.  P had said under cross examination that Mother-in-law did not ask Mr Chan to pay any rent.  She further said that at that time, Mother-in-law was only working part-time in a restaurant, and after moving into the Property, Mr Chan was the one who paid for the rates, management, utilities bills, and that Mr Chan was also paying for his mother’s living expenses.  P’s evidence was that although some of the bills were issued in name of Madam Law or Mother-in-law, after Mr Chan moved in, he was the person responsible for the Property, and not Mother-in-law.

27. In about 1998, P’s younger son entered Hong Kong and started to occupy and reside in the Property together with his father Mr Chan, and Mother-in-Law.

28. P’s one way permit to Hong Kong was issued on 14 June 1999, and she moved to Hong Kong under the one-way permit with her elder son to rejoin the rest of the family, and thereafter resided in the Property with Mother-in-law, Mr Chan, and their 2 sons.  The Mother-in-law then moved out to other accommodation in late 1999 leaving Mr Chan, P and their sons to occupy the Property.  Mr Chan later passed away in 2005.

29. One year after Mr Chan died, Mother-in-Law also passed away.

30. It was P’s evidence that after the death of Mr Chan, P and her two sons had been residing in the Property until the Compulsory Sale, and they had not paid any rent to Madam Law or to any other person. 

31. P had produced the following supporting documents in support of her family’s occupation:

(i) Demands for rates for various periods (“Rates Demands”);

(ii) Receipts for management fees for various periods (“Management Receipts”);

(iii) Utilities Bills for various periods (“Utilities Bills”);

(iv) Receipts for maintenance and improvement works (“Maintenance Receipts”).

32. From the Agreed Facts, it was not disputed that :

(i) The Rates Demands for the period from 31 October 1986 up to 31 March 2015 were issued to Madam Law.  P said Mr Chan had paid for the rates from 1985 to June 1999, and thereafter P had paid for the rates, namely from June 1999 up to the Compulsory Sale.  P said she had tried to change the name on the Rates Demands but was not able to do so as she was unable to provide personal information such as the HKID copy of Madam Law. 

(ii) The available Management Receipts from March 1986 to November 1994 were issued to the Mother-in-law.  The available Management Receipts from January 1999 to June 2007 were issued to Mr Chan.  The available Management Receipts from November 2010 to May 2012 were issued to P. P said Mr Chan paid for the management fees from 1985 to June 1999, and she paid from June 1999 up to the Compulsory Sale.

(iii) The available electricity bills from 31 December 1985 to 28 October 1995 were issued to Madam Law, and for the period from 28 November to 28 July 2007 were issued to Mr Chan, and from 28 October 2010 to 28 January 2015 were issued to P. 

(iv) The available water bills from 3 March 1986 to 4 November 1987 were issued to Madam Law, and from 18 March 2003 to 18 November 2014 were issued to P.

(v) The available telephone bills for the period from 15 April 1986 to 18 February 1987 were issued to the Mother-in-law and for the period from 14 November 1998 to 14 October were issued to Mr Chan.

(vi) According to P, from 1985 to June 1999, Mr Chan paid all the Utilities Bills and from June 1999 up to the Compulsory Sale, P paid the same.

(vii) Further, P’s evidence was she paid for maintenance works to repair the water leakage problem for the Property in 2002, and in 2006, P had paid for the renovation works of the Property and she produced the receipts.  In 2002, the Incorporated Owners for the building carried out improvement works of the common area of the building and she had paid for the cost as per those receipts dated 1 August, 1 September and 1 October 2006 produced by her.

33. It can be seen from the above that:

(i) the earliest Rates Demand was dated 31 October 1986 issued to Madam Law, covering period from 1 October 1986 to 31 December 1986[7];

(ii) the earliest Management Receipt was for March 1986 issued to the Mother-in-law[8];

(iii) the earliest electricity bill was dated 31 December 1985 issued to Madam Law, for month of December 1985, but there appeared to be no usage of electricity from December 1985 until March 1986[9];

(iv) the earliest water bill was dated 3 March 1986 issued to Madam Law, but again there appeared to be no usage of water prior to 3 March  1986[10];

(v) the earliest telephone bill was dated 15 April 1986 issued to Mother-in-Law, for reconnection of the residential line on 11 March 1986[11];

(vi) the earliest of the Maintenance Receipts was in August 2002 issued to the Chan family.

34. As held by Lam J (as he then was) in Hong Kong Kam Lan Kook Ltd v Realray Investment Ltd (No 5) [2007] 4 HKC 122 (“Lam’s Judgment”), factual possession required an appropriate degree of physical control and it must be a single and exclusive possession[12].

35. Although P was living in the Mainland after her marriage with Mr Chan in 1988, her evidence showed that she had visited Hong Kong prior to her being granted the one way visa.  She had also produced the above mentioned various bills and receipts from amongst Mr Chan’s papers, with one electricity going back to December 1985, although there appeared to be no usage until March 1986.  She was not really challenged on her evidence that since Mr Chan moved in, Mr Chan was in control of the Property, and that since then, Mr Chan and later herself and their 2 sons had been in single and exclusive possession of the Property, which was their home.  There was no evidence that anyone else had resided in the Property since March 1986.

36. To summarise, there was no sufficient evidence to contradict P’s evidence as to the factual possession.  However, the documentary evidence produced by her indicated occupation from March 1986 onwards.  Having considered all the evidence, it is my finding that, Mother-in-law was occupying the Property some time prior to 1985 and Mr Chan did move into the Property, latest by March 1986 and since then, Mr Chan and later P had been in physical control of the Property, and their occupation and possession of the Property was a single and exclusive possession, until the Compulsory Sale.

Intention to possess

37. As held in Lam’s Judgment[13]:-

“The necessary intent was an intention to possess, and it was not necessary to show that the squatter had an intention to own or even an intention to acquire ownership. It was an intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far was reasonably practicable and so far as the processes of the law would allow. Such an intention could not be established if the squatter was willing to pay rent if asked. Such willingness as completely inconsistent with the intention to possess. Intention had to be manifested and proved and to be inferred from the acts themselves. It had to be sufficiently clear so that the owner, if present at the land, would clearly appreciate that the claimant was not merely a persistently trespasser, but was actually seeking to dispossess him.”

38. From the evidence, the Mother-in-law would have entered into the tenancy with Madam Law prior to Madam Law’s death, or some time prior to 29 October 1981.

39. On P’s evidence, Mother-in-law had first taken occupation and possession of the Property as a tenant of Madam Law.  According to P who was told by Mr Chan, the Property was let to Mother-in-law upon a monthly and/or periodic tenancy at a rental collected by Madam Law and paid by Mother-in-law to Madam Law.  Thus, as Mr Mok submitted, Mother-in-law’s occupation and possession of the Property was “as of right”.  In other words, Mother-in-law had entered into possession of the Property as a tenant with the consent of Madam Law.

40. Mr Mok further submitted that the estate/tenure transmitted to the tenant through the tenancy would not automatically come to an end upon death of the landlord[14], and that the tenancy had to be ended to stop the tenant’s possession as of right. 

41. Mr Mok submitted that it would take time before the tenancy could be considered as having come to an end, and that the Mother-in-law only stopped paying rental because of the disappearance of her landlord, Madam Law.  Thus, in the circumstance, it would be natural to assume that, for some period of time after Madam Law stopped to appear to collect rent, the Mother-in-law would be prepared to pay back the rent if Ms Law were to turn up again and demand rent, and that this would be particularly so considering that, according to P, the Mother-in-law and Ms Law had a harmonious relationship. 

42. Mr Mok further submitted that the only evidence on intention to possess was what P had said in her 1^st affirmation that: “I have already treated the Property as my own and all along I am the one who is responsible for all outgoing expenses and maintenance of the Property. Even if the Defendant [Ms Law] re-appears and demands rent from me or seeks to repossess the Property, I shall reject her and uphold my rights and interest in the Property without any hesitation because the Defendant has abandoned the Property for many years and failed to assume my liability of the outgoings and maintenance thereof ”[15]. 

43. Mr Mok submitted that what was said above was only the intention of P herself, who did not move into the Property until 1999, and there was no evidence of the intention of her husband Mr Chan, or the Mother-in-law.

44. Mr Mok’s cross examination of P on this issue was firstly on whether Mother-in-law would have paid rent had the landlord/Madam Law turned up suddenly in 1985 to discuss the tenancy.  P’s answer was that it would be Mr Chan who would be discussing such matters with the landlord and not Mother-in-law, as in 1985, Mr Chan was in charge or responsible for all matters relating to the Property.  When asked whether Mother-in-law would agree to pay rent if she was asked, P said that Mother-in-law would not pay anything, as everything was paid by Mr Chan after he moved in. 

45. Mr Mok then asked P prior to Mr Chan moving in, had Madam Law turned up, would Mother-in-law pay the rent.  P’s answer was that Mother-in-law would definitely not pay any rent because Madam Law had disappeared for such a long time, and there was no reason as to why if she suddenly turned up, then Mother-in-law would then pay the rent.  P further said Mother-in-law had told her that she would not pay any rent as Madam Law had disappeared for so many years, and on re-examination, P had said Mother-in-law had told P many times when P was visiting Hong Kong during 1989-1990.

46. Mr Mok had submitted that as it was P who had said in her 1^st affirmation she would not have paid rent had Madam Law turned up to ask for it, thus this issue had no doubt been discussed between P and her legal advisors, and yet she had never mentioned in her 3 affirmations that the Mother-in-law or Mr Chan had ever told her that they would have not paid rent had Madam Law suddenly turned up.

47. Mr Mok had further submitted that there was no suggestion in any of her 3 affirmations that Mother-in-law had ever told her anything relevant to the case, since according to P, her evidence in her affirmations was based on either what Mr Chan had told her, or from Mr Chan’s papers or from her own knowledge after she moved into the Property in 1999.  Thus, Mr Mok submitted P’s evidence in this respect should be rejected.

48. Whether P was told by Mother-in-law or not, the fact remained that so far as Mother-in-law was concerned, Madam Law would have disappeared from 29 October 1981 onwards.

49. There was no sufficient evidence that if Madam Law had turned up thereafter and demanded rent, Mother-in-law or Mr Chan would have paid it.  Even if as submitted by Mr Mok, the tenancy would not automatically come to an end upon death of Madam Law, one would have thought after a reasonable time lapse, it would have been natural for Mother-in-law and/or Mr Chan to come to the view or assumed that something must have happened to Madam Law and that the tenancy had ended.

50. Section 12 of the LO provides for accrual of right of action in case of certain tenancies, and under section 12(2), an oral tenancy from year to year or other period shall be deemed for the purposes of LO to be determined at the expiration of the first year or other period and the right of action of the person entitled to the land subject to the tenancy shall be deemed to have accrued at the date of such determination subject to the proviso therein.

51. At present, the exact terms of the oral tenancy between Madam Law and Mother-in-law were not exactly known.  In any event, by March 1986, over 4 years had lapsed since Madam Law’s disappearance.  I accept P’s evidence that neither Mother-in-law nor Mr Chan had the intention of paying up all arrears of rent, or to resume paying rent, in the event of any sudden reappearance of a landlord who had disappeared for over 4 years.  It is thus my view that after Mr Chan moved in, latest by March 1986, the tenancy between Madam Law and Mother-in-law had already ended and so was Mother-in-law’s possession as of right. 

52. Further, latest by March 1986, the Mother-in-law by allowing Mr Chan to move in and to assume payment of rates, and utilizes bills, including reconnecting the residential telephone line in Mother-in-law’s own name, and Mr Chan by moving in and assuming the control of the Property and responsibility of paying for all expenses of the Property and moving his wife and children in, Mother-in-law and/or Mr Chan were acting inconsistently with the title of the paper owner/Madam Law.

53. I therefore find that P has established that it was the Mother-in-law’s and Mr Chan’s intention, as well as P’s own intention, to exercise exclusive control and to possess the Property for their own benefit, to the exclusion of the paper owner and/or others.

Adverse Possession

54. In light of the above, I am satisfied that the Mother-in-law and Mr Chan, and later P through Mr Chan, had been in adverse possession of the Property since latest March 1986.  Further, the possession by Mother-in-law and/or Mr Chan and P through Mr Chan was continuous and uninterrupted since March 1986 until the Compulsory Sale.  

2^nd Main Issue – SoJ’s claim for bona vacantia

Whether Madam Law died intestate

55. Government Counsel Ms Lai Chau Mei (“Ms Lai”) had sworn 2 affirmations on behalf of SoJ.  There was no challenge by P on the factual matters in Ms Lai’s affirmations.

56. In the Assignment, Madam Law was described as a “Married Woman”.  According to Ms Lai, the search by SoJ with the Director of Immigration revealed no record of marriage contracted in Hong Kong relating to Madam Law. Ms Lai had said that other than this, there was no information available as to whether Madam Law was married outside Hong Kong, or the identity or whereabouts of her husband, or whether her husband had survived her.

57. I note that there was no search in the Divorce Registry.  Anyway, Madam Law was 68 years of age when she died, and that was some 31 years ago when the attempts of service of the documents in the LT Proceedings were made in 2012.  If she was indeed married, her husband, if of similar age, would be around 99 years of age by 2012.  SoJ took the position that in the event that Madam Law was married, her husband did not survive her[16].

58. From the Agreed Facts, the following was agreed :-

(i) The searches conducted by SoJ revealed that Madam Law died intestate and not leaving any husband, issue, parent, brother or sister of the whole blood or half blood (or their issue), grandparent, or uncle or aunt who is a brother or sister of the whole blood or half blood of a parent of Madam Law (or their issue);

(ii) SoJ was informed by the applicants in the LT Proceedings of all their service attempts of the documents in the LT Proceedings on Madam Law, including substituted service as ordered in the LT Proceedings, and that notwithstanding the same, the applicants had not heard from Madam Law or her relatives (if any) in response thereto, and no one had appeared for Madam Law and no claim other than P’s claim had been lodged with the Lands Tribunal in the LT Proceedings in respect of the Property;

(iii) On 7 January 2012, the applicants conducted a search at the Probate Registry which revealed that no grant was issued in respect of Madam Law’s estate.

59. As seen from Ms Lai’s affirmations, apart from relying on the efforts made by the applicants in the LT Proceedings to serve or to bring to the attention of Madam Law/estate of the LT Proceedings, the efforts made by SoJ had been :

(i) Conducting a bankruptcy search;

(ii) Conducting a company search;

(iii) Conducting land searches using Madam Law’s English and Chinese names and HKIC;

(iv) Writing to various government departments and public authorities, including the Immigration Department, the Inland Revenue Department, the Rating and Valuation Department, the Social Welfare Department, the Department of Health, the Transport Department, the Hospital Authority, the Housing Department, and the Civil Service Bureau, enquiring whether they possessed any information on whether Madam Law had any spouse, next of kin or other family relatives.

60. All the above efforts and searches conducted so far had revealed that Madam Law died intestate.  However, in my view, some specific enquiries had not been carried out, including the following:

(i) As seen in the letter dated 7 March 2012[17] from the Births and Deaths Registry, Madam Law’s dead body was returned from the Coroner to Victoria Public Mortuary.  It appeared on Madam Law’s death certificate that there was a burial order no 1256/81 issued by the then Coroner J Hansen[18].  There has been no enquiry made with the Coroner’s Court as to whether are still records available which may reflect Madam Law’s last known residential address or information on her next of kin.

(ii) In particular, there has been no enquiry made with the Law Society as to whether any will was left by Madam Law.

61. Normally, when an intended applicant applies for letters of administration in relation to the estate of a deceased said to have died intestate, the applicant has to prove intestacy, which includes evidence that a search for a will had been made among the deceased’s belongings and in particular that an inquiry from the Law Society had been made, to make sure the deceased had not made a will[19].  This is because a search at the Probate Registry may not be sufficient, since in a case where the deceased had made a will leaving everything to a beneficiary who may not be a next of kin, eg a named charity, the beneficiary may not be aware of his entitlement until the will is found.

62. I accept that this court did not raise the above specific enquiries with the parties at the trial and no submissions were made by Mr Lai or Mr Mok thereon.  The question as to whether Madam Law died intestate without leaving any persons entitled under section 4(2)-(8) of IEO was an agreed issue to be tried.  Even though Madam Law died some 35 years ago from now, I am of the view that it is still premature at this stage to say whether Madam Law had died intestate without leaving any persons entitled under section 4(2)-(8) of IEO, without all possible enquiries have been exhausted, including in particular the will enquiry.

Meaning of residuary estate

63. Under section 2 of the IEO, “residuary estate” means

“every beneficial interest in an estate as to which a person dies intestate, after payment of all such funeral and administration expenses, debts and other liabilities as are properly payable thereout, which (otherwise than in right of a power of appointment) he could, if of full age and capacity, have disposed of by his will.”

64. It was Mr Lai’s submission that “residuary estate” refers to “the net amount of money” after deducting expenses, debt and liabilities from the assets left by the deceased, and does not refer to a piece of property.  In this respect, he had referred to Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (“Williams on Executors”) where it is stated:

“The residuary estate of the intestate is the residue of the net money arising from the sale and conversion of real and personal estate after payment of testamentary expenses and liabilities and after setting aside a fund to provide for any pecuniary legacies, together with any unsold investments not required for administration and any ready money of the deceased[20].”

65. It has also been set out in the Halsbury Laws of Hong Kong, on the death of a person intestate as to any property, such property must be held by his personal representatives, as to the immovable property upon trust to call in, sell and convert into money such part as may not consist of money, and the personal representative has power to postpone such sale for such period as he thinks proper[21].  Further, the money left in the hands of the personal representative and any investments for the time being representing it, including but without prejudice to the trust for sale, any part of the deceased’s estate which may be retained unsold and is not required for administration purposes, form “the residuary estate of the intestate”, which is to be distributed in the manner or held upon the trusts prescribed by the IEO[22].

66. It was Mr Lai’s submission that only after sale of the Property and after payment of expenses and liability then the residue of the net money will form part of Madam Law’s “residuary estate”.  Before that, there was no “residue” available for distribution.

67. Mr Mok submitted that as no claim had in fact been made by any other person for over 30 years against Madam Law’s estate, and that the only proper factual inference to draw is that Madam Law’s estate, as from her death, had never been subject to any expenses debts and liabilities which would be required to be paid off before reaching the stage of crystallization of the residuary estate and that the only asset in the residuary estate was the Undivided Share and now the Sale Proceeds.

68. So far as the present information indicated, it would appear that there were no known funeral expenses, or that Madam Law had any debts or liabilities at the date of her death.  Even so, administration expenses however are unknown at this stage, as there has not been any administration so far.  If Official Administrator takes up administration, as seen later in the judgment, he also has to make enquiries and cause advertisements to be published under section 23B of the Probate Administration Ordinance, Cap 10 (“PAO”).  In my view, even if this court were to find against P on her claim for adverse possession, this would only mean that the Property/Sale Proceeds formed part of Madam Law’s estate. The amount of residuary estate can only be ascertained after there has been administration and administration expenses have been paid.

Inchoate right

69. Mr Lai had referred to the following in Williams on Executors :

(i) the right of a beneficiary on intestacy is no more than the inchoate right pending administration and assent[23];

(ii) until assent or conveyance, a person interested under the will or intestacy has an inchoate right transmissible to his own representatives, which is a chose in action capable of itself being settled or transmitted[24];

(iii) A person so interested cannot without the authority of the representatives, take possession of the property, even though the testator expressly directs that he shall do so[25];

(iv) A residuary legatee has no interest in a defined part of the estate until the residue is ascertained, nor can income be ascribed to unascertained residue.  His right, which is of course transmissible, is to have the estate properly administered and applied for his benefit when the administration is complete[26]

70. Mr Mok on the other hand referred the court to the Privy Council judgment in Wu Koon Tai v Wu Yau Loi [1997] AC 179.  In Wu Koon Tai, the father died in September 1921, and under the customary Chinese law of succession his son succeeded to the whole estate of the father, including the land.  The son was never registered as successor to the father, but sold the land in September 1934 and later the grandson was registered as successor to the father in 1951.

71. The Privy Council distinguished the case Lord Sudeley v Attorney General [1897] AC 11, which was relied on by the defendant in Wu Koon Tai, who was the registered successor of the grandson who died in 1962, as it was argued on behalf of the defendant that, whilst the estate of a deceased person was in course of administration, no beneficiary under the will or intestacy had any beneficial interest in any specific asset of that estate and that he had only a right to have the estate duly administered and since in 1934 the land was part of the estate of the father, the son could not validly contract to sell the land as a specific item of property.

72. However as said by Privy Council in the judgment, the son did not purport to sell the land until 13 years after the death of the father, and that in the absence of any evidence to the contrary, the correct factual inference must be that after that lapse of time the estate of the father had been fully administered and the son was entitled to land in specie by implied assent[27].

73. It was Mr Mok’s fall back submission that following Wu Koon Tai, the factual inference which should be drawn in the present case should be that the estate of Madam Law was fully administered and crystallised after a lapse 13 years after her death (namely after October 1994) if not at the date of her death, and that latest 13 years after her death the Undivided Share and the subsequent Sale Proceeds became part of her residuary estate.

74. That the Privy Council in Wu Koon Tai took the view that by 13 years after the death of the father in that case, the inference was that the father’s estate was fully administered and the son, the sole beneficiary, was entitled to the land by implied assent does not in my view mean that in every case, the factual inference to be drawn is necessarily 13 years.  I am of the view that each case must depend on its own facts.

75. The House of Lords Lord Sudeley case referred to and distinguished by the Privy Council in Wu Koon Tai was not placed before this court.  But what appeared to be rejected by the Privy Council in Wu Koon Tai was the argument of the defendant that since in 1934 the land was part of the estate of the father, the son could not validly contract to sell the land as a specific item of property.  I do not read what was said by the Privy Council to be necessarily rejecting the principle of English law that whilst the estate of a deceased person is in course of administration, no beneficiary under the will or intestacy has any beneficial interest in any specific asset of that estate, and that he only has a right to require the executor/administrator to have the estate duly administered. 

76. Succession to estate on intestacy is provided in section 4 of IEO.  Section 4(9) provides as follows:

“In default of any person taking an absolute interest under the forgoing provisions the residuary estate of the intestate shall subject to the Inheritance (Provision for Family and Dependants) Ordinance (Cap 481), belong to the Government as bona vacantia and the Government may (without prejudice to any other powers), out of the whole or any part of the property devolving on it provide for dependants, whether kindred or not, of the intestate, and other persons for which the intestate might reasonably have been expected to make provision.”

77. It was Mr Lai’s submission that there must be a process for the administration and distribution of the estate, and a process to ascertain the “residuary estate”, and before the residuary estate falls under section 4(9), there must be a process to ascertain the “default of any person taking an absolute interest under the forgoing provisions”.  It was Mr Lai’s submission that only upon the “default” being established, then the “residuary estate” would belong to the Government, and it could not be said that the residuary estate “automatically” becomes the property belonging to the Government upon the intestate’s death.

78. I accept Mr Lai’s submission that the right of a beneficiary on intestacy is no more than the inchoate right pending administration and assent and I accept that even a person dies intestate without leaving any persons entitled under section 4(2)-(8) of IEO, it cannot be said that the residuary estate of the intestate deceased “automatically” becomes the property of the Government upon the intestate’s death.

79. In Wu Koon Tai, the son had assumed his right as sole beneficiary of the land and entered into a contract to sell the land 13 years after the death of his father, but in the present case, there was no such act on the part of the Government.  In fact, no step was taken by SoJ or the Official Administrator to apply for administration of Madam Law’s estate or to claim the Property as bona vacantia even though notice was given to the Government on 6 March 2012 during the LT Proceedings.  Although the Government was later joined in the LT Proceedings, their position then was neutral.  Again no step was taken by the Government even after 26 November 2012 when Master Li appointed the Official Solicitor to accept service for the personal representative of Madam Law.  It was not until Ms Lai’s 2^nd affirmation of 16 October 2015 that the Government made a counterclaim for the Sale Proceeds as bona vacantia.

80. In the circumstances, in my view, if a factual inference has to be drawn that after a lapse of time, the estate of Madam Law was fully administered and the Government was entitled to the Property (if it still exists) in specie by implied assent, or the Sale Proceeds, in my view, it would be at the date of counterclaim.

Administration of Madam Law’s estate/residuary estate

81. If a person dies intestate in Hong Kong leaving estate in Hong Kong, under section 10 of PAO, such estate shall vest in the Official Administrator who may, if he thinks fit, receive and take possession of the same until administration is granted in respect thereof. 

82. Under section 9(1) the PAO, the Registrar shall be ex officio Official Administrator under that ordinance and the Registrar means the Registrar of the court and any Senior Deputy Registrar, Deputy Registrar or Assistant Registrar thereof [28]. 

83. Even though the Official Administrator should be entitled to administration under section 16 of PAO, as pointed out by Mr Lai, and as said earlier, nothing was done by the Official Administrator/the Registrar to administer Madam Law’s estate for over 30 years after she died.  No application for the grant of letters of administration was made by the Official Administrator/the Registrar.

84. In fact, upon enquiry from SoJ, the Registrar/Official Administrator had replied on 4 June 2012 that he would not take on the administration of Madam Law’s estate at that stage as the proceedings appeared to be contentious[29]. Anyway, Mr Mok submitted that once the present proceedings are determined, there will be no further reason to stop the Registrar/Official Administrator from exercising his power under section 10 of PAO, or to take up administration of Madam Law’s estate.

85. Mr Mok had also submitted that in the event that the court were to declare that the Sale Proceeds should go to the Government as bona vacantia, whether the Government would be required by the Trustees to obtain letters of administration of Madam Law’s estate before the payment of the Sale Proceeds would be a matter of formality.

86. As seen in paragraph 82-10 in Williams on Executors[30], in UK, the practice is that where it appears that the Crown may be entitled to claim bona vacantia, the facts should be referred as soon as possible to the Treasury Solicitor[31] and it is for the Treasury Solicitor to make any necessary inquiries and issue advertisements before applying for the grant. 

87. Mr Lai submitted that by reference to PAO, in particular sections 15, 23B and 23C, the Official Administrator in Hong Kong should be the counterpart of the Treasury Solicitor.  It was Mr Lai’s submission that there are no statutory provisions providing that SoJ is entitled to make an application under PAO unless the application is made pursuant to section 3(4) of PAO where a testator gives any part of his estate for charitable purposes.  

88. As seen under sections 23B and 23C of PAO, if the Official Administrator has been granted administration of Madam Law’s estate and there is unclaimed balance of the estate in his hands exceeding HK$500 and the persons entitled thereto are not known to him, he shall cause advertisements to be published as provided under section 23B of PAO, and only at the expiration of a period of 5 years from the advertisement, the Official Administrator is of the opinion that no claim can reasonably be expected against the estate he may transfer the balance of the estate to the general revenue. Further, under section 15 of PAO, if the estate does not exceed HK$150,000 in value, the Official Administrator can administer in a summary manner, and can pay the unclaimed balance to the Treasury, who will hold it for 5 years and then transfer it to the general revenue.

89. In the present case, the Official Administrator did not intervene in the present action, nor was he joined.  Mr Mok argued that there is no need to join the Official Administrator. 

90. Mr Mok further submitted that there is no applicable limitation period to the Official Administrator’s exercise of his power under section 10 of PAO, and application for letters of administration is only a formality. 

91. Whether a formality or not, the person who is to apply for administration of Madam Law’s estate under section 16 of PAO should be the Official Administrator/Registrar, and upon being granted administration, there are certain statutory duties under PAO which the Official Solicitor/Registrar have to carry out and in my view the Official Solicitor/Registrar cannot simply rely on the past efforts of service by the applicants in the LT Proceedings, or by SoJ in the present proceedings.

Conclusion

92. As indicated earlier, I am of the view that it is still premature to say at this stage that Madam Law had died intestate.

93. Even if this court has formed the view that Madam Law did die intestate without leaving any persons entitled to her estate under sections 4(2)-(8) of IEO, I am of the view that the right of the Government, or any beneficiary on intestacy, is no more than the inchoate right pending administration and assent.

94. As I have said, the person who is entitled to apply for grant of administration for Madam Law’s intestate estate is the Official Administrator/ Registrar.

95. Pending the Official Administrator being granted administration, and all necessary enquiries and advertisements made by the Official Administrator as administrator, the residuary estate cannot be crystallised. 

96. Having considered all the above, I have come to the view that the Government’s claim for the declarations sought in their counterclaim including that the Undivided Share or the Share Proceeds belonged to the Government as bona vacantia are premature.

The 3^rd Main Issue – The limitation period

97. Section 7(2) of LO provides that no action shall be brought by any person to recover land after the expiration of 12 years from the date on which the right of action accrued to him.  Prior to an amendment effected by section 5 of the Limitation (Amendment) Ordinance 1991 which came into operation on 1 July 1991, it was 20 years from such accrual[32].

98. It would appear from Mr Lai’s closing submission that he accepted the required period under section 7(2) as between P and Madam Law/her estate in the present case was 20 years.

99. It was this court’s finding that the adverse possession commenced latest by March 1986, and thus the right of action accrued to Madam Law/estate was from March 1986, which was prior to the present section 7(2) came into effect.  In my view, the applicable period as between P and Madam Law/estate should be 20 years from the accrual.  Thus, under section 7(2), Madam Law/estate was barred from recovering the Property by March 2006.

100. It was Mr Mok’s submission that the applicable limitation period should be 60 years under section 7(1) of the LO, on the basis that the Undivided Share had been vested in the Official Administrator who had been holding it for the Government as bona vacantia at the date of death of Madam Law, which was prior to the adverse possession by Mr Chan and P, or on the fall back position, 13 years after Madam Law’s death, the Government came in to replace Madam Law’s estate.

101. As seen earlier, under section 10 of PAO, where a person dies intestate, his estate shall vest in the Official Administrator, but this is only pending grant of administration.  No right of action accrues to an administrator until he has taken out letters of administration[33].  In the case of recovery of land, section 16 of LO applies but sill the right to recover lies with the administrator.

102. In any event, as seen earlier, it is my view that by March 2006, Madam Law/her estate had already been dispossessed of the Property, and P had acquired the possessory title to the Property.  Further, as seen below, it is my view that all Madam Law/estate’s title to the Property was extinguished at the expiration of 20 years from March 1986, namely in March 2006.

Effect of section 17 of LO

103. Section 17 of LO reads as follows:

“17 Extinction of title after expiration of period

 Subject to the provisions of section 10, at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished.”

104. Mr Mok submitted that even if the necessary period of adverse possession is established by P against Madam Law, P’s possessory title only has the legal effect of giving P a better right than the Government to take possession of the Property but it does not assign to P the Undivided Share, and that in relation to the rest of the world, Madam Law remained the owner of the Undivided Share with the right to exclusively use the Property, notwithstanding her title against P had extinguished and she would not be able to evict P from the Property.

105. Mr Mok had referred to Lam’s Judgment, where it was said, following St Marlebone Property Co Ltd v Fairweather [1963] AC 510, the extinguishment of the paper title owner’s right does not mean the paper title owner loses everything, and that he still has a good title against the whole world except this particular squatter and his successor in title[34]. 

106. In Fairweather, it was held although the lessee’s right and title as against the squatter was finally destroyed when the squatter dispossessed the lessee for the statutory period , the lessee’s right or title against persons who were not or did not take through the adverse possessor were not, and therefore the lessee’s estate as between himself and the lessor was not destroyed[35].

107. Further in Chan Tin Shi v Li Ting Sung (2006) 9 HKCFAR 29, it was held that the Government’s right to claim possession from the squatter when the Crown lease expired or to grant a new lease were not affected by the Limitation Ordinance[36].

108. Mr Lai however relied on what was said by Ribeiro PJ in Secretary for Justice v Chau Ka Chik Tso (2011) 14 HKCFAR 889, namely that the law of limitation operates through barring after the prescribed period, the right of action which had accrued to the person entitled until then to recover the land, and in principle, the bar must affect the entire interest that person had which had been protected by that right of action[37] (emphasis added).  Ribeiro PJ went on to say, section 17 brings certainty to the position as to title and where the person against whom adverse possession has run can no longer recover the land, his title is extinguished and the person in whose favour adverse possession has run acquires a possessory title to the extent of the entire title of the person dispossessed[38].

109. Mr Lai thus submitted that Madam Law’s “entire title” to the Property is extinguished, so is her right to receive her share in the Sale Proceeds and that P has acquired the “entire title” of the dispossessed paper owner which includes both the right of possession (if the Property is still there) and the right to receive the Sale Proceeds.

110. Mr Lai also referred to the Privy Council case of Chung Ping Kwan and Others and Lam Island Development Co Ltd [1997] AC 38 where it was held that, when a lessee has been dispossessed, his right under the old lease is barred and his right to exercise an option to renew (a right granted by the lease) is also barred.

111. As said in Lam’s Judgment, there is a fundamental difference between a registered title system and unregistered title system and that notwithstanding the Land Registration Ordinance, the land title system in Hong Kong is similar to the system for unregistered land in England, and that for unregistered land, possession can be a root of title[39].  Mr Lai further referred to the following passages in Lam’s Judgment :

(a) A squatter’s possessory title is defeasible by the superior title of the paper title owner until the former has successfully dispossessed the latter for 12 years under the current Limitation Ordinance, and after the expiry of the limitation period, the paper title owner can no longer recover possession from the squatter and the possessory title of the squatter becomes superior to the paper title[40].

(b) Under our system, in a dispute between a squatter who claimed to have established full adverse possession and a paper title owner, the court is adjudicating between two competing titles. … The effect of the Limitation Ordinance is to prescribe that if the squatter has dispossessed the paper title owner for the full limitation period, his title would become superior[41].

(c) In many instances, the court has to adjudicate upon competing proprietary claims to the same piece of property or the same sum of money.  After applying the relevant legal rules or principles…, the court will have to decide which competing claim prevails.  In consequence, the losing party’s interest in the property cannot be effectively exercised.  But it has never been suggested, nor can it be suggested, that in such circumstances there is a contravention of Arts 6 or 105 (of the Basic Law) in respect of the property rights of the losing party.  I do not see why the same analysis cannot be applicable in the context of the competing claims between the possessory title of a squatter and the paper title of the owner[42].

112. A squatter’s possessory title is a new title and the squatter does not acquire the true owner’s title, and instead, he acquires a new title of his own, and extinguishes the true owner’s title[43].

113. Mr Mok however argued that there was no parliamentary conveyance of Madam’s Law of the Undivided Share together with the exclusive right to use the Property.

114. However, in my view, the effect of section 17 is that P’s acquisition of the new possessory title in March 2006 would mean that P and her family were entitled to exclusive occupation and use of the Property, plus the use of all common parts of the building subject to the Deed of Mutual Covenant, as owner of the possessory title.  In any event, since March 2006, Madam Law’s or her estate’s title had been extinguished.  Madam Law/her estate had thus been dispossessed of the Property and was barred from recovering possession from P.  P’s possessory title had thus become superior to that of Madam Law’s paper title. 

115. In any event, in the present proceedings, no one was acting for Madam Law or her estate and no one had appeared to oppose P’s applications against Madam Law/estate before the court. 

116. Having considered all the submissions, in my view, P, as the successful adverse possessor, is entitled to a declaration that Madam Law’s or her estate’s title to the Property was extinguished in March 2006 by virtue of section 17 of LO, and that P was the owner in possession of the Property prior to the Compulsory Sale, with her possessory title being superior to that of Madam’s Law’s paper title.

The 4^th Main Issue – minority owner/Sale Proceeds

117. It was also Mr Mok’s submission that as P was not a “minority owner” in the LT Proceedings, P would not be entitled to the Sale Proceeds.

118. Further, it was Mr Mok’s submission that as there was no parliamentary conveyance of Madam’s Law of the Undivided Share, the practical consequences were that :

(i) notwithstanding P's possessory title, Madam Law still owned and could sell her Undivided Share;

(ii) the Undivided Share together with the other undivided shares of the Lot were sold by the Trustees (on behalf of the majority and minority owners under s 7(1)(i) & (5)(b) of LCSRO under the Sale Order to the auction purchaser in return for the sale proceeds paid by the purchaser;

(iii) The Sale Proceeds formed part of the residuary estate of Ms Law;

(iv) P never owned the Undivided Share and was not a successor in title to Madam Law;

(v) P was not a minority owner in the LT Proceedings;

(vi) P did not sell the Undivided Share together with the exclusive right to the purchaser in the Compulsory Sale and should not be entitled to any part of the Sale Proceeds;

(vii) The Trustees can only pay the majority and minority owners and not P.

119. Mr Lai on the other hand submitted that once P is granted the declaratory judgment, this can be registered as “title owner” in the Land Registry.  As pointed out by Mr Mok, no authority was cited for this assertion.

120. Mr Mok further submitted that a declaration of P’s possessory title would not make P the owner of the Undivided Share, and that any declaration made by the court of P’s possessory title cannot be registered under the “Owner Particulars” section and at most may be registered under the “Incumbrances” section, but registration under the “Incumbrances” section does not have the effect of rendering P the owner of the Undivided Share.

121. Anyway whether the declaratory judgment is registrable in the Land Registry under “Owner Particulars” or not, Mr Lai submitted during the hearing that it would not be necessary for P to register the declaratory judgment in the Land Registry, because all the Trustees need is a declaration that P was/ is the owner of the Property/Sale Proceeds, and that  once the court’s declaratory judgment is shown to the Trustees, there should be no reason as to why the Trustees should reject P’s claim as the “owner” of the Undivided Share.

122. Under section 2 of LCSRO, a “minority owner”, in relation to a lot which is the subject of an application : 

(a) means the person or persons who-

 (i) Owns or own undivided shares in the lot otherwise than as a mortgagee; but

 (ii) Is or are not the person or persons who has or have made the application; and

(b) Includes any person who becomes a successor in title to any such person or persons at any time before a purchaser of the lot becomes the owner of the lot where the lot is the subject of an order for sale.

123. Under section 2 of LCSRO, a “lot” means, among other things, any piece or parcel of ground the subject of a Government lease, and includes a section and subsection of a lot.

124. Mr Lai argued that the definition of a “minority owner” or “owner” does not exclude a “possessory owner”, nor is it restricted to a “paper owner” only or a “registered owner only”.  Mr Lai referred to Lam’s Judgment where it is said a possessory title is a title and Mr Lai submitted that it cannot be said that an owner, because his title is possessory in nature, he can only own the Property, and not the Undivided Share of the Property. 

125. Mr Mok on the other hand submitted that Mr Lai’s arguments were contrary to the authorities and in particular, the definition and the wording of the relevant sections of LCSRO, namely sections 7(1)(i), 7(5)(b), 11(1) and s11(2).

126. Section 7 of LCSRO provides for registration of the order for sale etc and section 7 (1)(i) provides that immediately upon that registration, notwithstanding any other law, there shall vest in the trustees the power to assign all the estate, right and interest in the lot held by the majority owner and the minority owner.  Section 7(5)(b) then declares that where the trustees exercise the power vested under subsection (1)(i), then for all purposes the assignment shall be as valid and effectual as if it had been made by the majority and minority owner of the lot.

127. Section 11 provides for the application of proceeds of sale and section 11(1) provides that the sale proceeds, after deduction of expenses and legal costs as set out therein, be paid to the trustees.  Section 11(2) then provides how the trustees are to apply the proceeds of sale, in particular, (a) to discharge any liability due to the Government in respect of the lot; (b) to discharge any incumbrances affecting the lot; and (c) payment of the residue. 

128. Under the definition of a “minority owner”, the only person excluded is a “mortgagee”, and a “mortgagee” under LCSRO “includes any person claiming under a mortgagee but does not include a mortgagee in possession”[44]. Further, under section 2(3) of LCSRO, it is specifically declared that whether for the purposes of the definition of “minority owner” and “majority owner” as read with section 3(1), a mortgagee in possession of any property on a lot shall be deemed to be the owner of the undivided shares in the lot which relate to that property. 

129. Further, section 8 of LCSRO provides for protection of the purchaser of a lot, etc.  Section 8(1)(a) provides that where the lot is sold subject to the order, immediately upon the purchaser of the lot becoming the owner of the lot all the “rights” of any “prior owner” (including the prior owner’s assigns or personal representatives) in or over the lot or any part thereof shall absolutely cease except to the extent, if any, specified in the order.  Section 8(1)(b) then provides for, among other things, the termination of any tenancy of any property on the lot, the delivery up of vacant possession of the property, and also compensation payable to the tenant by the majority/minority owner.

130. The “prior owner” in relation to a lot, in section 8 is defined under section 8(6) as (a) means a person who formerly owned an undivided share in the lot; (b) does not include the purchaser of the lot. Further, “rights” in relation to a prior owner of a lot, means all rights which (a) were exercisable by virtue of the prior owner’s ownership of an undivided share in the lot; and (b) affect the lot.

131. Notwithstanding Mr Mok’s submission, it would appear to this court from the above various sections in LCSRO that the sale or the purchase of a lot is not simply a sale or purchase of the paper title and the purchaser is purchasing all the rights of the prior owner, which in my view includes the right to possession including vacant possession of the lot, or of the property on the lot.

132. However, as Madam Law/her estate had been dispossessed of her rights to recover possession and her rights having been extinguished by the time of the Compulsory Sale, the only “rights” which Madam Law/her estate had at the time would be only a paper title to the Undivided Share as against the rest of the world.  As I have said, P’s possessory title was superior to that of Madam Law’s paper title.  In my view, having had her rights extinguished, Madam Law/her estate would not be in a position to deliver possession or vacant possession of the Property to the purchaser.  There was no evidence that the purchaser in the Compulsory Sale or any purchaser in a compulsory sale was prepared to purchase only the paper title, without actual vacant possession of the Property being delivered by the paper title owner.

133. The Trustees have not intervened nor have they been joined in these proceedings.

134. As mentioned earlier, no one had appeared on behalf of Madam Law/her estate in these proceedings to oppose P’s claim, and as the title of Madam Law/her estate had been extinguished under section 17 of LO, and the estate had been dispossessed of the Property since March 2006, in my view with P being declared the owner of the possessory title, as the successful adverse possessor, and with a title superior to that of Madam Law/estate, there is no reason why P cannot be deemed or regarded by the Trustees to be the owner of the undivided share in the Lot, in particular where there was no appearance or objection on behalf of Madam Law’s estate.

135. Alternatively, even if Madam Law/her estate still retained some rights to the Property prior to the Compulsory Sale being the paper title owner of the Lot, in my view, the declaratory judgment must be at least an “incumbrance”  affecting the Lot, and under section 11 (2)(b), the Trustees are to apply the Sale Proceeds towards the discharge of any incumbrances affecting the Lot and under section 11(7)(a), this shall be on the basis that, in the case of a minority owner, the minority owner of the Lot shall pay for the discharge to the extent that the liability or incumbrance, as the case may be, to the minority owner.

136. As no one had appeared on behalf of Madam Law/her estate and all her rights extinguished, and in absence of appearance or any objection on behalf of Madam Law/her estate, again there is no reason why the entirety of the Sale Proceeds should not go to P to discharge the incumbrance created by P’s possessory title.

137. Having considered all the above, and in light of there being no objection from Madam Law/her estate, nor from the Trustees, as submitted by Mr Lai, I see there no reason why the Trustees should reject P’s claim for the Sale Proceeds.

Basic Law Article 105 

138. This is a new point raised by Mr Lai in his closing submissions, but he did not advance any argument or submit any authorities apart from setting out Article 105.  In any event, in light of my above conclusions, I do not see the need to consider this point.

Orders

139. In the circumstances, the declarations/orders I grant are as follows:

(i) The plaintiff became the owner of the  Property as of March 2006;

(ii) The 1^st defendant’s title to the Property was extinguished by virtue of section 17 of the Limitation Ordinance Cap 347 as of March 2006;

(iii) The counterclaims of the 2^nd defendant be dismissed.

140. As for costs, I take the view that the plaintiff will have to issue the originating summons against the 1^st defendant in any event to seek the necessary declarations, and thus there should be no order as to costs of the issue of these proceedings until the intervention of SoJ, and thereafter, the plaintiff’s costs be borne by the Government.  This is a costs order nisi which will be made final after 21 days.

141. The plaintiff’s costs are to be taxed under the Legal Aid Regulations.